What employers are saying about ICHRAs

Inflation, skyrocketing premiums and annual rate increases have left many employers feeling backed into a corner. They’re looking for alternative ways to sponsor health benefits for some or all of their employees in a way that’s fair, competitive and affordable.

For a growing number of employers, individual coverage healthcare reimbursement arrangements (ICHRAs) are checking these boxes. An ICHRA allows employers to make tax-advantaged contributions to employees who enroll in a health plan through the individual marketplace.We’ve been helping employers take advantage of this model since its inception and have seen it be particularly successful for: 

• Employers seeking to lower or manage costs while expanding options for employees
• Groups that experience high employee turnover
• Groups having trouble meeting participation requirements
• Groups with consistently high or sizable renewals
• Groups that have employees in multiple geographic locations
• Small to midsize employers, with increasing appeal to larger groups
• Groups new to offering benefits

Since first becoming available to employers in January 2020, ICHRAs have seen a surge in adoption. As more advisors bring this alternative option to their clients, we wanted to better understand employers’ current perceptions of them. In partnership with Wakefield Research, Gravie recently conducted and published a nationwide employer survey of 500 health benefits decision-makers who don’t currently offer ICHRAs to better understand their motivations and the barriers to offering the solution. 

Below are three key research findings, plus important considerations for benefits advisors:

1. ICHRA is gaining steam as a long-term health benefits solution.

It’s no secret that ICHRA demand is on the rise. As many as 89% of benefits decision-makers are likely to consider health benefits through ICHRAs for their employees in the next three years.  

Many employers are looking at ICHRAs as a starting point for offering group-like health benefits to their employees. Many (87%) agree that ICHRAs may be a strategic, long-term fit for giving their employees the flexibility to choose the individual health plan that works best for them.

Considerations for benefits advisors: In either scenario, advisors can help clients build a comprehensive benefits strategy, and a roadmap for the future. For some clients, a hybrid model is often the right fit – where some employee segments have access to an ICHRA, while others are able to participate in a competitive group health plan. A hybrid model can be an effective solution that provides flexibility and choice for varied employee populations. 

2. Barriers remain, underscoring the importance of administrative support.

Although the majority of survey respondents showed favorable interest in ICHRA as a health benefits option, many are saddled with administrative burdens.

For nearly 3 in 4 benefits decision-makers, managing health insurance is one of the most difficult and time-consuming parts of their job, demanding nine hours per week, on average. For small and midsize businesses in particular, managing benefits is just one of the many hats these individuals wear —and they’re feeling stretched thin.

Considerations for benefits advisors: Over 80% of those we surveyed say there are multiple administrative barriers that are stopping them from pursuing an ICHRA at this time. From shopping to enrollment, payment processes to compliance and ongoing support, employees are raising their hand for assistance – highlighting the opportunity for advisors and benefits administrators to provide a more hands-on approach.

3. Employers seek dedicated support from benefits partners and vendors.

More than 4 in 5 benefits decision-makers are more likely to offer an ICHRA to their employees if another company or vendor managed it for them and provided dedicated support, according to Gravie’s survey.

Making the transition to a new health benefits solution is often overwhelming: 76% of employers who are considering a transition from an employer-sponsored group plan to individual plans through ICHRAs have numerous unanswered questions and dread the administration process.

Considerations for benefits advisors: In today’s competitive climate, it’s important to stay informed about this model. More and more employers will explore alternative health benefits solutions like ICHRAs in the years ahead. Consulting on a holistic strategy – keeping both group health plans and ICHRAs in mind – means providing more tailored offerings to clients that best align with their budget and goals. 

Andrew Reeves is Senior Vice President and General Manager of Gravie ICHRA.